Monday, August 11, 2014

Operating Performance Ratios: Sales/Revenue Per Employee

Series : Ratio Analysis    (18 th Post)


This Ratio helps us to understand the Sales generated by single employee,This is the measure of performance of human resource of a company ,It also indicates how effectively a company is utilizing its Human Resource.

Higher the Ratio the higher the revenue per employee.Note the Revenue per employee will vary from Industry to Industry according to number of employees.Revenues will be less in Labour Intensive Companies on the other hand in Hight Tech companies where the labour is less the revenue is more

For analytical purposes this figure should be compared with the historical data to see any improvement or deterioration. It should also be compared with the other similar companies operating in the same industry. This comparison over time and across industry will give usefully insights into the productivity of personnel.

Formula: Sales Revenue Per Employee = Revenue / Number of Employees (Average)

Next Post on Ratio Analysis:  Operating Performance Ratios: Operating Cycle

Related Articles

·          Liquidity Measurement Ratios

  Liquidity Measurement Ratios Quick Ratio      
Share |

1 comment:

  1. Considering these ratio helps to understand a company's performance from different perspectives. Traders can gain good suggestions on their trading patterns by consulting Financial Advisory Services providers as well.